Good News for Manufacturing

The Aussie dollar has dropped 6 cents in 6 consecutive weeks and is trading at 91 US Cents on expectations that the US Federal Reserve will taper their stimulus measures, which is good for Australian Manufacturers who rely heavily on exporting.

It’s a speculative market with nothing formally announced, but there’s also downward movement in Gold and in the strength of the Yen against the greenback, to which I don’t fully understand, since America is so heavily in debt and with the way the run their country, how they’ll get closer to being in the black makes your brain hurt, however, the drop in the dollar is good news for us and if we can see a further downward trend to the mid 70’s low 80’s, we’ll start seeing more confidence in the sector.

A couple of new projects I’d like to mentioned is Rio Tinto approving a $400 million dollar project to expand their Pilbara iron ore production and ASC & Saab Systems have won the $57 million project to upgrade the Collins Class Submarines.

More projects like these need to be approved and with Abbott’s pledge of being known as the infrastructure prime minister, we better see new projects for roads, ports, utilities and rail after the productivity commission review is released in March.

The Business Council of Australia has estimated key projects need $400 billion in private spending over the next decade to deliver the $760b required and wants that to come from tolls and user-pay systems.

Either way, the wheel needs to turn for the money to start circulating around the country and if the Government want to raise the debt ceiling it should be for key projects that drives employment and growth that ultimately returns tax revenue with increased spending from business and consumers.

If you have any queries, would like advice or more information, please contact me here, call on +61 3 9210 4428 or email me at djovica@redstack.com.au